Gold as the Medium

March 19, 1981

In addition to all the other known reasons why gold is the best known medium of exchange, we should note that it appeals to the highest material motivation for human labor--pride and self-esteem, which is highest on the scale of human material motivation. Consider the scale: food-shelter-clothing-furniture-appliances-...-jewelry-trophies-high luxury goods.All people will seek first to exchange their labor for food which they don't have. Those with surplus food will exchange for shelter or clothing which they don't have, and so up the scale. Those with surplus wealth seek to exchange up the scale. Gold appeals to the highest step on the scale. Kings always want more gold, to build gold cups, plates, chairs, even gold castles. There is no limit to how much gold anyone will accept. There is a limit to how much corn or cotton one can use. Gold is therefore the medium which has more exchange value than any other material substance or thing.

Postscript, June 23, 1981 Note also that, as a commodity, the supply of gold is not subject to fluctuations of weather, as are corn, lumber, etc. Therefore gold survives the long-term waves which seem to be related to weather (cold-hot, wet-dry).